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Intent Standard for Induced Patent Infringement: Global-Tech Appliances, Inc. v. SEB S.A. (PDF)
Source: Congressional Research Service (via Pierce Law IP Mall)

While § 271(a) of the Patent Act (35 U.S.C. § 271(a)) creates liability for someone who directly infringes a patent (by the unauthorized use of a patented invention), § 271(b) of the act provides indirect infringement liability for someone who “actively induces” another party to engage in infringing activities. “Inducement” is a theory of indirect patent infringement, in which a party causes, encourages, influences, or aids and abets another’s direct infringement of a patent. In Global-Tech Appliances, Inc. v. SEB S.A., the question was the legal standard for the mental state necessary for a defendant to be liable for actively inducing infringement under § 271(b). The U.S. Court of Appeals for the Federal Circuit had ruled that a plaintiff may hold a defendant liable for induced patent infringement by showing that the defendant had a “deliberate indifference of a known risk” that the induced acts may violate an existing patent.

On May 31, 2011, the Supreme Court rejected the Federal Circuit’s “deliberate indifference” standard. By a vote of 8-1, the Court ruled that induced infringement under § 271(b) requires actual knowledge that the induced acts constitute patent infringement. However, in a somewhat surprising step, the Court declared that this statutory knowledge requirement could be satisfied by proof of the accused inducer’s “willful blindness” (that is, the defendant subjectively believes there is a high probability that a patent exists and takes deliberate actions to avoid learning of that fact). This is the first time that the Supreme Court has applied “willful blindness,” a criminal law doctrine, to a civil patent infringement case. It is also the first time that the Court has held that proof of willful blindness can substitute for actual knowledge, thus establishing a standard not only for patent infringement cases brought under § 271(b), but also potentially for all federal criminal cases involving knowledge.

Patent Reform in the 112th Congress: Innovation Issues (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Congressional interest in patent reform has increased as the patent system becomes more significant to U.S. industry. Patent ownership is perceived as an incentive to the technological advancement that leads to economic growth. Yet, this augmented attention to patents has been accompanied by persistent concerns about the fairness and effectiveness of the current system. Several studies, including those by the National Academy of Sciences and the Federal Trade Commission, recommended reform of the patent system to address perceived deficiencies in the operation of the patent regime. Other experts maintain that major alterations in existing law are unnecessary and that the patent process can adapt, and is adapting, to technological progress.

Two omnibus patent reform bills introduced in the 112th Congress, S. 23, the America Invents Act, and H.R. 1249, the Leahy-Smith America Invents Act, would make significant changes to the patent system. Both bills would adopt a first-inventor-to-file priority system, allow assignee filing, establish USPTO fee-setting authority, provide for post-issuance review proceedings at the USPTO, and introduce other reforms. Several of these proposals have been the subject of discussion within the patent community for many years, but others present more novel propositions.

Although S. 23 and H.R. 1249 have many similarities, the two bills differ in some respects. For example, S. 23 would address the residency requirement of judges serving on the U.S. Court of Appeals for the Federal Circuit, while H.R. 1249 would not. Unlike S. 23, H.R. 1249 would significantly broaden patent law’s first inventor defense. Other distinctions with respect to funding for the USPTO and other topics exist as well.

While the provisions of the proposed legislation would arguably institute the most sweeping reforms to the U.S. patent system since the 19th century, many of these proposals, such as pre- issuance publication and prior user rights, have already been implemented in U.S. law to a more limited extent. These and other reforms, such as the first-inventor-to-file priority system and post- grant review proceedings, also reflect the decades-old patent practices of Europe, Japan, and our other leading trading partners.

Some observers are nonetheless concerned that certain of these provisions would weaken patent rights, thereby diminishing incentives for innovation. Other experts believe that changes of this magnitude, occurring at the same time, do not present the most prudent course for the patent system. Patent reform therefore confronts Congress with difficult legal, practical, and policy issues, but also with apparent possibilities for altering and possibly improving the legal regime that has long been recognized as an engine of innovation within the U.S. economy.